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George Osborne prepares for run on banks in troubled eurozone countrieshttp://www.theguardian.com/politics/wintour-and-watt/2011/nov/29/georgeosborne-autumn-statement-20111
Tories warn of collapse of eurozone and danger of a depression as Germany is criticised for slow response<p>George Osborne said in his <a href="http://www.hm-treasury.gov.uk/press_136_11.htm">autumn statement</a> on Tuesday that the Treasury is &quot;undertaking extensive contingency planning&quot; in response to the eurozone crisis.</p><p>The chancellor gave little detail of this planning. This was in line with the decision of the Office for Budget Responsibility (OBR) not to assess the impact on Britain's economic growth of a &quot;disorderly outcome&quot; to the eurozone crisis.</p><p>The five to midnight scenario will be a run on the banks in Greece, Italy and Portugal. Spain is fine. There is already a drawdown from banks. But we haven't got to a run on the banks yet.</p><p>If the European summit could reach a deal on December 9, its next scheduled meeting, the eurozone will survive. If not, it risks a violent collapse. Even then, there is still a risk of a long recession, possibly a depression.</p><p>A depression will mean we won't be able to take money out of holes in the wall.</p><p>The disaster will hit a lot quicker than people have realised. There is a good chance the eurozone will split up.</p><p>Wolfgang Sch&auml;uble is the most dangerous man in Europe. Born in 1942, he was brought up in the embers of post war Germany. He is going to have to end up writing a cheque for well over €1tn euros. It would have been a few hundred billion if Germany had acted sooner.</p><p>For all the parallels, I still cannot bring myself to believe that we are heading back to the 1930s.</p> <a href="http://www.theguardian.com/politics/wintour-and-watt/2011/nov/29/georgeosborne-autumn-statement-20111">Continue reading...</a>George OsborneAutumn statement 2011Eurozone crisisEuroEuroBankingMervyn KingBank of EnglandItalyPortugalGreeceSpainOffice for Budget ResponsibilityEuropean UnionEuropean Central BankAngela MerkelGermanyFinancial TimesPoliticsUK newsWorld newsBusinessEconomic policyTue, 29 Nov 2011 23:50:00 GMThttp://www.theguardian.com/politics/wintour-and-watt/2011/nov/29/georgeosborne-autumn-statement-20111Fiona Hanson/PAGeorge Osborne fears a run on the banks in Italy and other troubled eurozone members. Photograph: Fiona Hanson/PANicholas Watt2011-11-29T23:50:00ZJohn Major and Ed Balls top list of five Britons who kept UK out of eurohttp://www.theguardian.com/politics/wintour-and-watt/2011/nov/24/john-major-davidcameron
Former prime minister gave Britain a legal right to stay out of euro which shadow chancellor exploited in full<p>Matthew Parris reminded us over the weekend that history has, so far, been unkind to Sir John Major. The world, Parris wrote, simply decided Major was &quot;hapless&quot;.</p><p>Margaret Thatcher, on the other hand, will always be seen as the decisive Iron Lady.</p><p>We were very concerned that there wouldn't be convergence, by which piece of jargon we meant that the southern European states wouldn't be able to compete with Germany within a single currency on a level basis. Of course in 1991 Germany was still unifying; but we looked forward to when she'd have a much more powerful economy and ask ourselves whether the southern states would compete. We didn't think so, and we thought that would be chaotic.</p><p>The second reason was that we thought having a unification of monetary policy without a unification of fiscal policy would be likely to end in difficulties. We thought countries wouldn't control their deficits in essence and that's exactly what happened. We tried to cover that – a British suggestion by proposing in the Maastricht Treaty that no country should have a fiscal deficit above 3% of GDP. That was agreed, but alas it wasn't kept to. Germany broke that, France broke that everybody else broke it and then you got huge debt beginning to build up. </p><p>If countries are affected differently by an economic event – such as an oil shock or German unification – then the desired policy response will not be the same. Tying countries together under these circumstances means large and persistent regional problems – slow growth and high unemployment in different European countries, precisely what has occurred in Europe since German unification.</p><p>In short, monetary union, in the manner and timetable envisaged in the [1991 Maastricht] treaty, is an economically and politically misconceived project. Imposing the same monetary policy on the whole of Europe, without automatic fiscal stabilisers, would mean persistent regional growth and unemployment differentials within the Community, with all the political and social dislocation that brings. Already, Europe is plagued by right-wing nationalism and opposition to the European project as a result of the slow growth and high unemployment that the inflexible version of the ERM has brought.</p><p>The mistake is to let economic schemes run ahead of political realities. The goal of a single European currency, like an ever closer union, is not inherently misconceived. But to work, it requires a much closer degree of social and political cohesion and integration than Europe is likely to achieve in this decade or probably the next too.</p><p>Little convergence has occurred since 1987 and there has also been little improvement in levels of performance. Yet, of the large countries, only Italy's position looks hopeless, the main problem being its public finances. To converge on the EC's average ratio of public sector debt to GDP even over 10 years, its budget deficit needs to improve by a daunting 8 percentage points of GDP.</p><p>Either Italy manages an unprecedented budgetary transformation, or it defaults on its debts, or it will be excluded from Emu, or the criteria will be ignored. There are no other alternatives. *</p><p>In applying our economic tests, two things are clear: there is no realistic prospect of our having demonstrated before the end of this Parliament that we have achieved convergence that is sustainable and settled rather than transitory; and Government have only just begun to put in place the necessary preparations that would allow us to do so. Other countries have for some years been making detailed preparations for a single currency. For all the reasons given, we have not.</p><p>Therefore, barring some fundamental or unforeseen change in economic circumstances, making a decision to join during this Parliament is not realistic. It is therefore sensible for business and the country to plan on the basis that, in this Parliament, we do not propose to enter a single currency.</p><p>Whether you agree with me, disagree with me, like me or loathe me, don't bind my hands when I am negotiating on behalf of the British people.</p><p>As long as our party is distracted by endless debates on the single currency we will always have one hand tied behind our backs. I want to free everyone in the party, whatever their views on the single currency, to fight this government with both hands and provide an alternative to it.</p> <a href="http://www.theguardian.com/politics/wintour-and-watt/2011/nov/24/john-major-davidcameron">Continue reading...</a>John MajorDavid CameronEuroEuroEuropean UnionEd BallsGordon BrownWilliam HagueFinancial TimesPoliticsMargaret ThatcherTony BlairEdward HeathFranceGermanyItalyBusinessEurozone crisisWorld newsUK newsGeorge OsborneKenneth ClarkeThu, 24 Nov 2011 20:08:10 GMThttp://www.theguardian.com/politics/wintour-and-watt/2011/nov/24/john-major-davidcameronMartin ArglesJohn Major, pictured with Margaret Thatcher at the 1996 Conservative Party Conference, did more than anyone else to keep Britain out of the euro. Photograph: Martin ArglesNicholas Watt2011-11-24T20:08:10Z